Legal Definitions - will contract

A will contract is a legally binding agreement where one person promises to leave specific property or assets to another person (or a designated third party) through their last will and testament. This promise is not a mere gift; it is made in exchange for something of value, known as "consideration," provided by the other party. Because it involves a mutual exchange of promises and value, a will contract creates a legal obligation that must be honored, unlike a typical will which can generally be changed at any time.

• Example 1: Care for a Lifetime

  An elderly widow, Mrs. Henderson, lives alone and needs assistance with daily tasks. Her neighbor, Mr. Davies, offers to provide ongoing care, including cooking, cleaning, and transportation, for the rest of her life. In return, Mrs. Henderson signs a written agreement promising to include a clause in her will leaving her house to Mr. Davies upon her passing. Mr. Davies provides the agreed-upon care for several years until Mrs. Henderson's death.

  Explanation: This is a will contract because Mrs. Henderson made a promise (to leave her house in her will) in exchange for Mr. Davies's consideration (providing care services). This agreement creates a legal obligation, meaning Mr. Davies would have a claim to the house even if Mrs. Henderson later changed her will to exclude him, as long as he fulfilled his part of the contract.

• Example 2: Business Succession Planning

  Two business partners, Sarah and Mark, own a successful manufacturing company. Sarah wants to retire and sell her shares to Mark, but Mark doesn't have enough immediate capital to buy her out entirely. They agree that Mark will pay Sarah a reduced lump sum now for her shares, and in exchange, Sarah will execute a will contract promising to leave her valuable antique car collection to Mark's son, David, in her will. This ensures David receives a significant inheritance that Mark cannot currently afford to provide directly.

  Explanation: Here, Sarah's promise to leave the car collection to David (a third-party beneficiary) in her will is the core of the contract. The consideration is Mark's immediate payment for Sarah's business shares. This arrangement legally binds Sarah to include David in her will for that specific asset, making it more than just a future gift.

• Example 3: Repayment for a Significant Loan

  Mr. Chen lends his struggling niece, Lisa, a substantial sum of money to start her new business, with the understanding that she will repay him when the business becomes profitable. After several years, Lisa's business is thriving, but she wants to ensure her uncle is compensated beyond simple repayment. They enter into a written agreement where Lisa promises to include a provision in her will leaving Mr. Chen her valuable art collection as a gesture of gratitude and additional compensation for his crucial support, in exchange for him forgiving the remaining balance of the loan.

  Explanation: This scenario illustrates a will contract because Lisa's promise to bequeath her art collection in her will is supported by Mr. Chen's consideration of forgiving the outstanding loan balance. This transforms what might have been a simple repayment into a legally enforceable agreement to transfer property via a will.